Henry Ford

“ When that is done, the business will begin to make its own money, just as a repaired human body begins to make sufficient pure blood.
Borrowing may easily become an excuse for not boring into the trouble. Borrowing may easily become a sop for laziness and pride. Some business men are too lazy to get into overalls and go down to see what is the matter. Or they are too proud to permit the thought that anything they have originated could go wrong. But the laws of business are like the law of gravity, and the man who opposes them feels their power. ”

“ We are not against borrowing money and we are not against bankers. We are against trying to make borrowed money take the place of work. We are against the kind of banker who regards a business as a melon to be cut. The thing is to keep money and borrowing and finance generally in their proper place, and in order to do that one has to consider exactly for what the money is needed and how it is going to be paid off.
Money is only a tool in business. ”

“ Borrowing for expansion is one thing; borrowing to make up for mismanagement and waste is quite another. You do not want money for the latter--for the reason that money cannot do the job. Waste is corrected by economy; mismanagement is corrected by brains. Neither of these correctives has anything to do with money. Indeed, money under certain circumstances is their enemy. And many a business man thanks his stars for the pinch which showed him that his best capital was in his own brains and not in bank loans. ”

“ Finance concerns not merely the profit or solvency of a company; it also comprehends the amount of money that the company turns back to the community through wages. There is no charity in this. There is no charity in proper wages. It is simply that no company can be said to be stable which is not so well managed that it can afford a man an opportunity to do a great deal of work and therefore to earn a good wage.
There is something sacred about wages--they represent homes and families and domestic destinies. People ought to tread very carefully when approaching wages. ”

“ It is perfectly beyond their comprehension that the price should ever voluntarily be reduced. That is why putting the usual type of banker or lawyer into the management of a business is courting disaster. Reducing prices increases the volume and disposes of finance, provided one regards the inevitable profit as a trust fund with which to conduct more and better business. Our profit, because of the rapidity of the turnover in the business and the great volume of sales, has, no matter what the price at which the product was sold, always been large. ”

“ Manufacturing is not to be confused with banking, and I think that there is a tendency for too many business men to mix up in banking and for too many bankers to mix up in business. The tendency is to distort the true purposes of both business and banking and that hurts both of them. The money has to come out of the shop, not out of the bank, and I have found that the shop will answer every possible requirement, and in one case, when it was believed that the company was rather seriously in need of funds, the shop when called on raised a larger sum than any bank in this country could loan. ”

“ The stockholders, to my way of thinking, ought to be only those who are active in the business and who will regard the company as an instrument of service rather than as a machine for making money. If large profits are made--and working to serve forces them to be large--then they should be in part turned back into the business so that it may be still better fitted to serve, and in part passed on to the purchaser. ”

“ For instance, I was once asked, when contemplating a reduction of eighty dollars a car, whether on a production of five hundred thousand cars this would not reduce the income of the company by forty million dollars. Of course if one sold only five hundred thousand cars at the new price, the income would be reduced forty million dollars--which is an interesting mathematical calculation that has nothing whatsoever to do with business, because unless you reduce the price of an article the sales do not continuously increase and therefore the business has no stability. ”

“ A successful business is profitable to all three of these interests--planner, producer, and purchaser.
People whose profits are excessive when measured by any sound standard should be the first to cut prices. But they never are. They pass all their extra costs down the line until the whole burden is borne by the consumer; and besides doing that, they charge the consumer a percentage on the increased charges. Their whole business philosophy is: "Get while the getting is good." They are the speculators, the exploiters, the no-good element that is always injuring legitimate business. ”

“ If we want the home to be happy, we must contrive to keep the shop busy. The whole justification of the profits made by the shop is that they are used to make doubly secure the homes dependent on that shop, and to create more jobs for other men. If profits go to swell a personal fortune, that is one thing; if they go to provide a sounder basis for business, better working conditions, better wages, more extended employment--that is quite another thing. ”

“ People will crowd money on you. It is the most subtle temptation the young business man has. But if you do borrow money you are simply giving a stimulant to whatever may be wrong. You feed the disease. Is a man more wise with borrowed money than he is with his own? ”

“ And let me say right here, that I do not believe that we should make such an awful profit on our cars. A reasonable profit is right, but not too much. So it has been my policy to force the price of the car down as fast as production would permit, and give the benefits to users and labourers--with resulting surprisingly enormous benefits to ourselves.
This policy does not agree with the general opinion that a business is to be managed to the end that the stockholders can take out the largest possible amount of cash. ”

“ If a man's business is in excellent condition and in need of expansion, it is comparatively safe to borrow. But if a business is in need of money through mismanagement, then the thing to do is to get into the business and correct the trouble from the inside--not poultice it with loans from the outside.
My financial policy is the result of my sales policy. I hold that it is better to sell a large number of articles at a small profit than to sell a few at a large profit. This enables a larger number of people to buy and it gives a larger number of men employment at good wages. ”

“ The profit is not constant. After cutting the prices, the profits for a time run low, but then the inevitable economies begin to get in their work and the profits go high again. But they are not distributed as dividends. I have always insisted on the payment of small dividends and the company has to-day no stockholders who wanted a different policy. I regard business profits above a small percentage as belonging more to the business than to the stockholders. ”

“ Seasonal work is hard on the working force. Good mechanics will not accept jobs that are good for only part of the year. To work in full force twelve months of the year guarantees workmen of ability, builds up a permanent manufacturing organization, and continually improves the product--the men in the factory, through uninterrupted service, become more familiar with the operations.
The factory must build, the sales department must sell, and the dealer must buy cars all the year through, if each would enjoy the maximum profit to be derived from the business. ”

“ Borrowing under certain circumstances is just like a drunkard taking another drink to cure the effect of the last one. It does not do what it is expected to do. It simply increases the difficulty. Tightening up the loose places in a business is much more profitable than any amount of new capital at 7 per cent.
The internal ailments of business are the ones that require most attention. "Business" in the sense of trading with the people is largely a matter of filling the wants of the people. ”

“ In order to earn the proper profit on our narrow margin we must have a rapid turnover. We make cars to sell, not to store, and a month's unsold production would turn into a sum the interest on which alone would be enormous. The production is planned a year ahead and the number of cars to be made in each month of the year is scheduled, for of course it is a big problem to have the raw materials and such parts as we still buy from the outside flowing in consonance with production. We can no more afford to carry large stocks of finished than we can of raw material. ”

“ This policy I hold is good business policy because it works--because with each succeeding year we have been able to put our car within the reach of greater and greater numbers, give employment to more and more men, and, at the same time, through the volume of business, increase our own profits beyond anything we had hoped for or even dreamed of when we started.
Bear in mind, every time you reduce the price of the car without reducing the quality, you increase the possible number of purchasers. There are many men who will pay $360 for a car who would not pay $440. ”

“ You might as well borrow 100,000 lathes as $100,000 if the trouble is inside your business. More lathes will not cure it; neither will more money. Only heavier doses of brains and thought and wise courage can cure. A business that misuses what it has will continue to misuse what it can get. ”

“ To borrow under such conditions is to mortgage a declining property.
The time for a business man to borrow money, if ever, is when he does not need it. That is, when he does not need it as a substitute for the things he ought himself to do. ”

“ A considerable part of finance is in the overcoming of seasonal operation. The flow of money ought to be nearly continuous. One must work steadily in order to work profitably. Shutting down involves great waste. It brings the waste of unemployment of men, the waste of unemployment of equipment, and the waste of restricted future sales through the higher prices of interrupted production. That has been one of the problems we had to meet. We could not manufacture cars to stock during the winter months when purchases are less than in spring or summer. ”

“ Men grow uppish, lazy, or careless. A business is men and machines united in the production of a commodity, and both the man and the machines need repairs and replacements. Sometimes it is the men "higher up" who most need revamping--and they themselves are always the last to recognize it. ”

“ There is nothing to be expected from them. They have no vision. They cannot see beyond their own cash registers.
These people can talk more easily about a 10 or 20 per cent. cut in wages than they can about a 10 or 20 per cent. cut in profits. But a business man, surveying the whole community in all its interests and wishing to serve that community, ought to be able to make his contribution to stability.
It has been our policy always to keep on hand a large amount of cash--the cash balance in recent years has usually been in excess of fifty million dollars. ”

“ Formerly, when we assembled and shipped cars, this was of the highest importance because we had no place in which to store finished cars. Now we ship parts instead of cars and assemble only those required for the Detroit district. That makes the planning no less important, for if the production stream and the order stream are not approximately equal we should be either jammed with unsold parts or behind in our orders. When you are turning out the parts to make 4,000 cars a day, just a very little carelessness in overestimating orders will pile up a finished inventory running into the millions. ”

“ If a business is not increasing, it is bound to be decreasing, and a decreasing business always needs a lot of financing. Old-time business went on the doctrine that prices should always be kept up to the highest point at which people will buy. Really modern business has to take the opposite view. ”

“ If you make what they need, and sell it at a price which makes possession a help and not a hardship, then you will do business as long as there is business to do. People buy what helps them just as naturally as they drink water. ”

“ This requires that the largest share of the profits be put back into productive enterprise. Hence we have no place for the non-working stockholders. The working stockholder is more anxious to increase his opportunity to serve than to bank dividends.
If it at any time became a question between lowering wages or abolishing dividends, I would abolish dividends. That time is not apt to come, for, as I have pointed out, there is no economy in low wages. It is bad financial policy to reduce wages because it also reduces buying power. ”

“ It permits the planning of production, the elimination of dull seasons, and the waste of carrying an idle plant. Thus results a suitable, continuous business, and if you will think it over, you will discover that most so-called urgent financing is made necessary because of a lack of planned, continuous business. Reducing prices is taken by the short-sighted to be the same as reducing the income of a business. It is very difficult to deal with that sort of a mind because it is so totally lacking in even the background knowledge of what business is. ”